| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 105 === This paper examines the relationship between firm performance and Pay ratio. Furthermore, the paper also examines the relationship between the performance of the company and its pay gap. In this paper, firm performance is proxied by the rate of return on assets (ROA) and all samples are US-listed companies, covering the period from 2007 to 2014.
Empirical results show that when the company''s CEO is overpaid, has higher degree of the company’s overseas operations and belongs to the labor-intensive industries, the company is less likely to disclose information necessary to infer its pay gap. By contrast, when the company is larger and audited by Big four accounting firms, it is more likely to disclose the information necessary to reveal the pay gap. This finding suggests that, the costs and benefits of revealing such information affect the firm’s decision whether to disclose it.
In addition, I find that when the deviation between the CEO and other employees’ compensation is larger, the company exhibits better operating performance. This finding is consistent with the Tournament theory: when companies pay higher salaries to the managers winning the competition (which may cause pay ratio to be greater), the managers will be encouraged and thus make greater efforts to improve firm’s operating performance.
|
|---|
